Money management in Forex

12. Trading strategies on Forex

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Many believe that the Forex trading game. This is partly true, but unlike the game of Forex trading is a real opportunity to earn a living. Investments in the currency market do not require deep mathematical knowledge, but in Analytics trader should understand. One of the most important abilities - the ability to interpret the news.

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Our dealing center has over activities in the international currency market and gives the possibility to earn on sale of currency for both experienced and novice traders (Forex traders). Forecasts of leading analysts of the market, and, including trading robots and signals enable traders in their work.

The initial contribution that would be needed to get started in Forex (despite all the stories, wandering in the Network) is very small. First, you will have the opportunity to trade, to thoroughly examine all the rules and nuances of the market even without any investment (with the help of the demo account no Deposit or Forex accounts). In addition, the Forex market does not have to fear crises and sharp falls. Disaster that make of the enterprising and intelligent millionaire bankrupt, peculiar only to the stock market.
The number of losers among those trying to work on the markets, resorting to transactions with financial lever, or otherwise - trading on margin is 90%. This means that 90% of those who starts the betting, finish it with a net loss. The statistics testifies that ability to get rich quick in such markets is very low. To earn serious money here, traders should manage their money. Unless there was a very lucky chance to get rich on the markets, which are practiced deal with lever is impossible without appropriate management strategies.

No other knowledge in the ocean of information about trading on the market or about investing are not able to provide you profits faster than such a simple thing as money management.

Many successful traders look to the management of capital as the most important tool to ensure the full success on the market.

the Management of capital transfers trader to a profitable one area, it never dictates when to enter the market or to withdraw from it. Such management models is best defined as the management of the "trade" or "risk", which has nothing to do with correct methods of capital management.

Work with the positions of the protective stop just tells you where to exit the market, fixing your losses to the transaction. Even if relevant to the management of capital, this concept better characterized as exit from the market of "stop-loss" or exit from the market by the level of "acceptable risk". Proper money management does not apply to certain aspects of market entry or exit a trade. Giving the order to stop, you decide where you want to exit the trade, for each particular position. Management of capital and output "footsteps" are two completely different concepts.

the Correct money management takes into account the dimensions of risk and reward, as well as the total value of funds on the trading account.

Principles of capital management should be applied in the short and long-term trading, options trading, securities, futures, spreads, exchange. And it does not matter which strategy has brought you a loss (or profit), and on what market you trade, is really not important.

investment Planning should be a conscious part of the preparation for the first deal. All traders engaged in transactions, common: they all make decisions relating to the management of capital, when considering the number of contracts, options, markets or risk for the first transaction. In addition, the decisions taken at all for each transaction, to a certain extent related to the management of capital, even if the trader has no idea.

the Understanding of the optimum rate, the ratio between the amount of open positions and capital in General, you'll find more than an unexpected effect: the phenomenon of divergence between the profits of hundreds of percent in the same series of transactions, directly dependent on the "optimality" your position size. And I must say that this kind of art (size management positions ) recognizes the aerobatics in risk management when using practices for managing capital.

none of the management strategy will pay hopelessly losing situation in winning, however, planning the placement of commercial capital, you should be able to predict the situation. Especially the "positive/negative expectations, distributing investment, the trader must think of the prospect of positive expectations.

Here is an example:

the Probability of winning trades = 60%

the Probability of losing transactions = 40%

the Amount of each win = 200 dollars

the Amount of each loss = $ 150

the Expression of positive expectations will be as follows:

[1+(V/L)] x R-1

(where R is the probability of winning, V - the winnings, L - the amount of loss)

So the previous example will have the following mathematical expectation:

(1+1,33) x 0.6-1 = 2,33 x 0.6-1=1,398-1 = 0,398

a Positive expectation is determined by the value of this expression greater than zero. The larger the number, the stronger the statistical expectation. If the value is less than zero, then the mathematical expectation will also be negative. The more module negative value, the worse the situation. If the result is zero, then the expectation is to break even.

wealth Management is only numeric game that requires the use of positive expectations, the trader can stop looking for the "Holy Grail" of trading. Instead, he can check his trading method, find out how this method logically justified, whether he gives positive expectations. The correct methods of capital management, applicable in relation to any, even very mediocre methods of trade, will do the rest of the work.

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